Out of the long list of updates that we are carrying in this issue, the most impacting one is the Krishi Kalyan Cess (KKC) of 0.5% from 1st June, 2016. The tiny % cess has kicked up a storm already. Well, as it stands, if you got an invoice which is unpaid, you will have to shell out KKC from 1st June onwards though there was no KKC at the time of receiving the invoice. Now, service tax is all of 15% including Swach Bharat Cess and KKC. Have a choice ?
5th June is World Environment Day. We must crib about the doomsday nearing us as part of the Environment Day celebrations 🙁 We are used to whipping ourselves for ruining the Mother Earth, increasing the concrete jungle, drying up water bodies, polluting the air, depleting wild life etc. etc. Well, all is not lost. There are problems galore and the daily grind, but we need to have a positive set of glasses to see solutions around, look for happy moments, experience the beauty around us, enjoy what we have instead of cribbing about what we have not or shall have not.This struck me when a few days back, my client, an Australian couple talked about the pleasant, sunny weather of Namma Bengaluru, its warm people, the vibrancy, the beautiful canopy of flower-laden trees, the carpet of yellow, red, blue, lavender flowers welcoming them, not to mention the choice of restaurants, the choice of outdoor activities and the overall spirited ambience in this Silicon Valley of India. I said yes, lets soak in the little things around us and enjoy life’s breath-taking moments…….before the taxmen begins to levy some enjoyment tax ☺!!
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KKC of 0.5% payable w.e.f. 1st June, 2016 takes the total Service Tax rate to 15%. Implications are as below:
Thanks to the Point of Taxation Rules, KKC is applicable to receipts on or after 1.6.2016 in respect of services provided prior to 1.6.2016.
KKC is applicable to services under Reverse Charge mechanism.
No KKC on services provided in the Negative List or otherwise exempted by Notification.
Rebate of KKC paid on input services for provision of export services would be available. Services in SEZ is eligible for refund.
Cenvat credit in respect of KKC shall be utilised only towards payment of KKC.
Exemption available to charitable institution u/s 12AA of Income Tax Act is liable to be denied if the revenue from commercial activities exceeds 20% of the total receipts. It is clarified that such charitable institutions will not lose their registration u/s 12AA merely because of crossing such cut-off bench mark. If the commercial revenue exceeds 20% in a particular year without any change in the nature of activity then the tax exemption would be denied in that year. Registration would be cancelled only in strict compliance with the applicable provisions.
W.e.f. 1st March, 2016, persons who are required to furnish return of income electronically must compulsorily e-file appeals before Commissioners of Income Tax (Appeals). Due to technical issues, the time limit for filing such e-appeals has been extended by one month i.e. upto 15th June, 2016.
In terms of the Income Declaration Scheme, 2016 notified under the Finance Act, 2016, following assessees shall declare income on or before 30th September, 2016
Where he has failed to furnish the Income Tax Return
Where he has failed to disclose the income in the return
Where the income has escaped assessment due to non-disclosure
This scheme provides an opportunity to above persons who have not paid full taxes in the past to pay tax, surcharge & penalty totaling in all to 45% of such disclosed income declared. Due date for payment is on or before 30th November, 2016.
Indirect Tax Dispute Resolution Scheme under Central Excise has been notified w.e.f. 1st June, 2016. Commissioner (Appeals) shall not proceed with the appeals in respect of which a declaration and acknowledgment has been received.
To ensure more transparency and greater disclosure, RBI has decided to disclose the compounding orders and guidelines on the computation of amount imposed during compounding on its website. Guidance Note gives the computation of compounding fee imposed under FEMA for different types of contravention.
In case of transfer of shares between a resident buyer and a non-resident seller or vice versa, not more than 25% of the total consideration can be paid by the buyer on deferred basis within a period not exceeding 18 months from the date of the transfer agreement. The total consideration finally paid for the shares must be compliant with applicable pricing guidelines. Escrow agreement or indemnity for the stipulated percentage may be entered into / provided.
Master Direction 10 (relating to Establishment of Branch Office / Liaison Office / Project Office in India by foreign entities) and Master Direction 16 (relating to Exports of Goods and Services) have been updated.
Section 8 company, trust or society established by the Central / State Government / Act of Parliament / State Legislature are also now qualified to undertake CSR activities delegated by any company without a 3 year track record. This is in addition to the existing provision permitting company owned Section 8 company / trust / society which do not require a track record. All other entities other than these two categories need to have a 3 year track record to become CSR-eligible.
With MCA portal continuing to struggle, the due date for e-filing of forms without additional fee has been extended upto 10th July, 2016. This means all forms which are due to be filed under the Companies Act, 2013 between 25th March, 2016 and 30th June, 2016 can now be filed without any additional fee.
Further, due date for filing Form 11 (Annual Return) of LLP w.r.t. FY ending on 31st March, 2016 has been extended upto 30th June, 2016 without any additional fee.
The provisions of the Companies Act, 2013 relating to Special Courts are effective from 18th May, 2016. Existing courts in certain states (J&K, Maharashtra, Goa, Gujarat, MP, West Bengal) have been designated as Special Courts for trying offences punishable with imprisonment of 2 years or more u/s 435 of the Companies Act, 2013.
Note: The contents of this
Newsletter are only a summary and has not dealt with any issue in detail. Any action
taken or proposed to be taken must be in consultation with professionals and not
merely based on the articles / news updates. Lex Valorem disclaims all liability on action taken without professional advice.